PROTECT-DRAFT
16-19 funding formula review
Consultation
October 2011
PROTECT-DRAFT
16-19 funding formula review
Consultation
Contents
1
Introduction
The case for change
Scope of the consultation
Responding to the consultation
3
2
Funding disadvantage
9
3
Simplifying participation funding
Funding per learner
Weightings for programme funding
20
4
Success rates
32
5
Further simplification
Area costs
Residential care standards
Short programme modifier
Transitional protection
Data and audit
Equality analysis
36
6
Implementation
40
7
Next steps
43
Annexes
A
Current funding formula
44
B
Impact analysis of proposals
48
C
Equality analysis
56
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1: Introduction
The case for change
1.
The national funding formula used for the education and training of 1619 year-olds in England has supported the significant improvement in
attainment by young people over recent years. It operates across the
many different routes a young person may choose and has brought
maintained school and Academy sixth forms, colleges and other
providers onto the same basis for funding.1 It gives those providers
additional funding depending on the characteristics of the young people
who choose to learn at their institution.
2.
Nevertheless, it is not appropriate for a system of compulsory
participation, and it has two significant weaknesses that we need to
address. First, the funding formula is not always transparent and
straightforward, requiring providers and funding bodies to develop
significant data and audit systems to operate it. The opacity and
complexity of the formula means that young people do not have a
standard funding allocation that follows them. The total amount a
provider receives depends on the details of each learner’s separate
qualifications, characteristics, and achievements. At the same time, the
various elements of the current approach, which provide the additional
funding for disadvantaged learners, are resource-intensive to maintain
and not easy to understand. We need to ensure that the funding
formula is as transparent and simple as possible, while also ensuring
that it continues to distribute public money in a fair and appropriate way.
3.
Secondly, we know that too many young people currently do not
progress into secure employment or further and higher education (HE)
and training. We need to ensure that all learners study the best
qualifications that ensure they can progress to further study or into a job.
Furthermore, too many learners without a solid grounding in the basics
are being allowed to drop the study of English and maths – the most
vital foundations for employment – when these are precisely the
subjects they most need to continue. In revising the funding formula we
need to strip out the perverse incentives that are inherent in the current
system of “payment-per-qualification,” and introduce funding at learner
level that will support the delivery of a coherent programme of learning
for the young person. The current funding system is unique compared
to pre-16 education in England and international post-16 education.
Professor Wolf found that it:
 forces institutions to steer a high proportion of learners into courses
they are likely to pass easily, if they are to remain solvent, and risks
severe downward pressure on standards in teacher-assessed
awards,
Unless we are referring to a specific type of provider, we use ‘providers’ to mean all types of
provider.
1
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 gives institutions strong incentives to choose qualifications that pay
well – that is, qualifications that are well-funded but require less
teaching time in practice than their value implies,
 gives institutions no incentive to offer coherent study programmes,
and
 gives institutions no real powers or incentives to respond directly to
the labour market.2
4.
Moving to a system for 16-19 learners, whether vocational or academic,
which funds on a per learner basis, with the amount varying to some
extent by programme, would tackle the worst of these effects and bring
significant benefits to the young person. At the moment, providers
devote too much attention to “exploring the intricacies of ‘success rate
data anomalies’ which will have a major impact on their annual
budgets”3, and as Professor Wolf writes, England “is the only country, to
the best of my knowledge, where institutions routinely spend money
attending workshops which explain the latest wrinkles in the funding
formula and how best to exploit these.”4
5.
A simpler funding system will support autonomous institutions to offer
coherent and substantive study programmes, free from any perverse
incentives. Providers will be able to ensure that each young person is
on the correct programme to facilitate their progression to further
learning or employment, a requirement outlined in the Wolf review.5
A new challenge for 16-19 funding: getting the principles right
6.
This is a critical time for 16-19 education and training as it changes to
meet the demands of compulsory full participation, at a time when every
element of public funding and every single budget is under the greatest
scrutiny.
7.
The proposals in this consultation document build on the actions the
Government has already taken to simplify the funding system through
the introduction of the lagged learner number approach to allocations,
and to deliver fair funding so that all providers are funded at the same
level by 2015. But there is a long way to go before we can say that
funding follows the learner, and that we have removed perverse
incentives to steer young people onto easier programmes with a large
number of qualifications that do not improve their opportunities for
progression.
Alison Wolf, Review of Vocational Education – the Wolf Report, Department for Education,
March 2011, p.60. tinyurl.com/wolfreport
3 Review of Vocational Education, op. cit., p.62.
4 Review of Vocational Education, ibid.
5 Review of Vocational Education, op. cit., recommendation 6, p.14.
2
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We consider the principles of a new system should:
a. Support policy objectives
A revised funding formula must support the policy objectives of:
 raising the age for compulsory participation in education,
 eliminating the attainment gap between young people from poorer
backgrounds and those from more affluent ones, and
 removing any perverse incentives that funding may exert over the
curriculum.
b. Be fair
Funding should follow the learner, and be based on the lagged learner
number approach to allocations to ensure stability.
Funding should be based on inputs (currently guided learning hours)
that recognise the typical costs incurred by providers in delivering the
programme.
c. Be clear and transparent
The funding formula should have clear funding calculations, the links
to the relevant data should be easy to understand, and the basic
elements and calculations should, where practical, be aligned with
proposals for funding pre-16, and with proposals for funding highneed pupils.
d. Enable data simplification
The minimum data necessary to provide the required level of
accuracy in allocations and assurance of public funds should be
collected.
e. Be clear what additional funds are being targeted at young people
from disadvantaged backgrounds
The funding formula should include a more transparent and consistent
element to show the extra funding targeted at young people, including
those on an Apprenticeship, from disadvantaged backgrounds. We
should aim to align this with the principles of the pre-16 pupil
premium, so ideally this should show how much extra funding will be
received by each learner classified as disadvantaged.
f. Avoid financially destabilising good quality provision
To meet this challenge, we must provide clarity, simplicity and
fairness to institutions as well as transparency to young people and
parents, so that everyone can better understand how successful
learning and provision is funded by government. This consultation will
lead to a redesigned national formula capable of continuing to support
the complete range of provision for all learners aged 16-19. The
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change will need to be carefully managed. Options for achieving this
are discussed in chapter 6.
A new ambition for young learners
9.
There is no doubt that the 16-19 further education system continues to
deliver ever greater success. In England, over 1.6 million young people
are in some form of learning, the highest ever number, with 91.6 per
cent of 16-17 year-olds participating in education or work-based learning
at the end of 2010. Participation of 16 year-olds alone stands at 96.1
per cent. In 2010, four out of five6 young people aged 19 were qualified
to at least level 2 and over half7 of all young people were qualified to
level 3.
10.
The gap in attainment between disadvantaged young people and their
more affluent peers continues to close. Between 2005 and 2010 the
gap in attainment of level 2 at age 19 between those in receipt of free
school meals (FSM) – a key proxy for deprivation – and their peers,8
closed by 8 percentage points.
11.
Despite this, the overall number of young people not in education,
employment or training (NEET) is still too high. At the end of 2010,
141,800 16-18 year-olds were NEET: this is 7.3 per cent of all 16-18
year-olds.9 This figure remains high, around one in ten, and has been
for over twenty years. We also know that it is more often young people
from disadvantaged backgrounds who are less likely to participate.
12.
Similarly, whilst the gap in attainment for disadvantaged learners has
narrowed in recent years, it is background and social class that remain
the key determinant of young people’s educational outcomes. The gap
in attainment opens up by the age of 22 months, and a child receiving
free school meals is around three times less likely than other children to
achieve good school outcomes at age 16. The attainment gap is
evident at every single point in the educational journey.
13.
The pre-16 pupil premium has been introduced to provide schools with
extra funding to spend on interventions that can support the attainment
of disadvantaged pupils. The Government remains committed10 to full
participation in education and training for 16-17 year-olds, to raising the
participation age to 17 in 2013 and to 18 in 2015. The question for post16 funding is how it can be most effectively used to better support young
people’s prospects, which are too often determined by home
background and circumstance.
6
81.5% of young people aged 19 possessed a level 2 qualification in 2010.
54.2% of young people aged 19 possessed a level 3 qualification in 2010.
8 GCSE and Equivalent Attainment by Pupil Characteristics in England, 2009/10 (SFR 37),
Department for Education, 16 December 2010, p.2 and p.6. tinyurl.com/SFR37
9 16- to 18-year-olds not in education, employment or training (NEET), Department for
Education, August 2011. tinyurl.com/2010neets
10 The Importance of Teaching – the Schools White Paper 2010, Department for Education,
November 2010, p.50. tinyurl.com/importanceofteachingwhitepaper
7
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The case for change is therefore powerful and compelling. As Professor
Wolf found from over 400 submissions from individuals and groups with
extensive knowledge of the current 16-19 and vocational system: “Many
highlighted its strengths and achievements. But none wanted to leave
things as they are: nor did they believe that minor changes were
enough. This is surely correct.”11
Scope of the consultation
15.
This consultation is limited to 16-19 learner responsive provision in
general and specialist further education (FE) colleges, sixth form
colleges, maintained school and Academy sixth forms (SSFs), and
commercial and charitable providers. It includes Apprenticeship
providers and the areas of Apprenticeships that are in scope are
included in this document.
16.
The consultation does not consider changes for funding for young
people with “high needs.” The high needs strand of the schools funding
consultation12 looks at children and young people aged 0-25 with
special educational needs (SEN) and disability in a consistent manner in
accordance with the green paper on SEN and disability.13
17.
The proposals in this consultation cover the following areas.
 Reforming disadvantage funding and aligning it more closely with
the principles of the pre-16 pupil premium. We are seeking views
on the scope and distribution of the disadvantage funding.
 Simplifying participation funding, and how we can move away from
funding an aggregation of the qualifications a young person is
studying, and fairly allocate funding to full and part time learners.
 Streamlining the way we address the additional costs of delivery of
certain provision, and how we can apply these to the programme of
study rather than the individual qualification.
 Revising area costs by potentially introducing consistency, and
possibly aligning area cost uplift with those applied pre-16 through
the dedicated schools grant (DSG).
 The potential removal of the success factor from the formula, or
treating achievement and retention separately.
 Simplifying the residential care standards uplift by removing it from
the funding formula and distributing it directly to providers, and
removing the short programme modifier.
 Using transitional protection and/or phased implementation to
support a smooth transition to the simpler funding formula.
11
Review of Vocational Education, op. cit., p.8.
Consultation on school funding reform: Proposals for a fairer system, Department for
Education, July 2011, p.46. tinyurl.com/schoolfundingconsultation
13 Support and aspiration: A new approach to special educational needs and disability,
Department for Education, March 2011. tinyurl.com/sengreenpaper
12
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18.
The Department for Business Innovation and Skills (BIS) and the Skills
Funding Agency are also taking action to simplify the adult skills funding
system. In line with the announcements set out in Further Education –
New Horizon, Investing in Skills for Sustainable Growth14, proposals are
being developed for a simplified rates structure, funding formula, and
new earnings methodology.
19.
16-18 Apprenticeships are included in the Skills Funding Agency’s
simplification plans. However, there are some aspects of 16-18
Apprenticeship funding where we believe it is important to retain
consistency across all 16-19 learners, and which therefore are within the
scope of this consultation. These aspects are:
 funding for disadvantage and additional learning support, and
 programme weighting factors.
20.
The content of this consultation has been informed by six expert
seminars with the Association of School and College Leaders (ASCL),
the Association of Colleges (AoC), the Association of Employment and
Learning Providers (AELP), the Sixth Form College Forum (SFCF), and
the Specialist Schools and Academies Trust (SSAT), as well as a
research project led by the YPLA to gauge the sector’s perception of
simplification.
Responding to the consultation
21.
Responses to be considered must be received by 4 January 2012.
22.
Responses to the consultation can either be made:
 online: education.gov.uk/consultations,
 by email: 16-19Funding.CONSULTATION@education.gsi.gov.uk,
or
 by post:
Consultation Unit
Area 1C
Castle View House
Runcorn
Cheshire WA7 2GJ
23.
The results of the consultation will be published in Spring 2012.
Further Education – New Horizon: Investing in Skills for Sustainable Growth, Department
for Business, Innovation and Skills, November 2010. tinyurl.com/FEnewhorizon
14
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2: Funding disadvantage
24.
The 16-19 funding system currently recognises that extra funding is
required to support activity to recruit and retain those learners that have
low prior attainment, have a learning difficulty or disability, or are
disadvantaged by their economic background compared to other young
people.
25.
The current national funding formula gives a significant weighting to
deprivation through the disadvantage uplift and the funding allocated
through additional learning support (ALS). The disadvantage uplift is
based on a combination of where the young person lives and their
personal circumstances (for instance, if they are leaving care). ALS is
based on prior attainment in English and maths, except in
Apprenticeships, as a proxy for those most likely to need additional
support, and on historical spend on learners with low level learning
difficulties and disabilities (LDD). Restrictions on the use of ALS were
removed for 2011/12, allowing head teachers and principals to
determine how best to use the funding. For further details of how the
current funding formula recognises disadvantage and prior attainment,
see annex A.
26.
Because disadvantage and ALS funding is embedded within the
allocations and largely calculated on sliding scales and historical spend,
we do not consider it to be as transparent or straightforward as it could
be. Although it fulfils a function, it does not stand up as a way of
ensuring that all deprived young people have the same level of funding
for their continuing education and training.
27.
This section considers how the costs associated with both economic
and educational disadvantage can be more effectively targeted within
the new funding system, as well as being simpler and more transparent.
A key issue is whether we should continue to have different funding
elements that recognise the different reasons why learners may need
additional support. We would not want to prescribe how funding will be
used, but we must consider that the number of learners with support
needs arising from each cause (prior attainment, LDD, and economic
disadvantage) will vary from provider to provider. We do not want
providers to avoid taking on certain learners because of the way that
disadvantage is funded.
28.
The proposals in this section will also apply to 16-18 Apprenticeships in
order to ensure consistency across all 16-19 learners.
Introducing simpler and more transparent funding for disadvantage
Additional support for those with learning disadvantages
29.
In considering the options for funding to recognise disadvantage, we
need to review how we provide funds for learners with additional support
needs that arise either from their low attainment or because they have a
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low level learning difficulty or disability.15 We need to consider whether
we provide a discrete element within the budget for this, or whether it
could be merged with other elements to achieve simplification. In
particular we need to consider whether the current system of allocating
ALS funding to providers to meet these extra support needs should be
changed.
30.
We are able to predict those needing extra support related to ability by
using GCSE attainment in English and maths as a proxy to identify
additional learning needs, but predicting low level LDD incidence is
more difficult. We need to determine whether the current principle of
determining funding for both on the same element of the formula is right.
Additional support for those from deprived economic backgrounds
31.
We also need to review how we provide funds for the additional costs
associated with meeting the needs of young people from disadvantaged
backgrounds. Our aim is to make sure that all deprived young people
attract the same level of disadvantage funding, which the provider will
be able to use to provide the additional support they need to help them
reach their full potential. The funding should be allocated in a similar
manner to the pre-16 pupil premium, in that its intention is to focus on
supporting social mobility.
32.
The revised method will complete a comprehensive programme of
support, which starts with the pre-16 pupil premium and continues
through the 16-19 bursary and the National Scholarship Scheme for
Higher Education.
33.
The future method of allocating will be similar to the pre-16 pupil
premium, and we expect the principles of operation would be as follows.
 It would be an additional sum of funding allocated to a provider
delivering to:
 any economically disadvantaged young person aged 16 or 17
who participates in education and/or training, and meets the
terms of raising the participation age legislation, and
 any economically disadvantaged 18 year-olds in full time
education.
 The above categories cover all 16-19 provision, including
Apprenticeship provision.
 It would be paid at a standard flat funding rate for all young people
who qualify, regardless of where they live or other circumstances.
 It would be paid pro-rata for part time learners.
 It would be calculated as an allocation to the provider.
15
This only includes funding for low level LDD as funding for high need pupils is included in
the Consultation on school funding reform, op. cit., p.28.
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 The provider would be free to decide how disadvantage funding
should be invested to the benefit of disadvantaged young people,
in line with the Government’s objectives.
 The funding would not be ring fenced and would not be accounted
for at an individual level. However providers will be expected to
demonstrate publicly to the communities they serve, to governors,
and to the government the progress they have made in addressing
issues of disadvantage through the use of this funding.
34.
We have separated out different aspects of disadvantage funding for
consultation: the scope, the eligibility, and the allocations methodology.
Implementation needs to take account of any wider changes to the
funding formula, as well as any unintended consequences on any
particular groups of learners, such as those with LDD.
Question for consultation
Q1. Do you agree that these are the right principles for the
operation of disadvantage funding?
Options for the scope of funding for disadvantage
35.
Your views are sought on the scope of the disadvantage funding. This
could be paid out of all or part of the current disadvantage funding
elements (that is, the disadvantage uplift and ALS). Because any new
approach will need to be based on better use of the existing budgets,
there is a particular need to make sure its operation is cost neutral,
straightforward, simple and, above all, targeted at those young people
who need it most. Our concern is to make sure that the way we
introduce the fund allows continuing resources for low level LDD, as well
as additional support for the cost of attracting and retaining
disadvantaged learners.
36.
Three options for defining the scope have been identified and are set
out below. The impact of each option is set out in annex B, using
2009/10 data to model each option.
Option 1: A single fund to recognise all forms of disadvantage
37.
This option would create a single budget that includes the funds
currently allocated for disadvantage uplift and the proportion of ALS
calculated on learners’ prior attainment in English and maths. We would
allocate this budget directly to providers based on a single measure of
deprivation. Providers would be expected to use this single allocation to
meet the needs of attracting and supporting disadvantaged learners in
the way they best see fit.
38.
The funds for meeting the support needs resulting from any learning
difficulty or disability up to £5,500 (or any revised threshold identified
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through the schools funding consultation16) would be met by retaining a
separate funding pot to meet such low level needs.
Option 1 advantages
Option 1 disadvantages
A single large fund to
administer, supporting fully the
Government aim to devolve
decisions to education providers
Funding for those with additional
support needs related to
educational disadvantage is not
separately identified
Fully transparent, as it is based
on one single criterion that
reflects general economic
disadvantage
Creates significant shifts in
funding between different
provider types, with big winners
and losers
Funding to meet low level LDD
needs is separately identified
and therefore supports the
principle of funding for high
need pupils in the schools
funding consultation’s proposals
Means of allocating budget for
LDD would have to be
developed
Highest possible funding rate
per disadvantaged learner
No additional support funding for
learners with low attainment if
the provider has no learners
identified as disadvantaged
Maximum targeting on deprived
households and therefore on
general economic disadvantage
Two funds to administer (single
budget for disadvantage and
additional support, and separate
budget for LDD)
Option 2: A fund to address economic disadvantage only with a separate
budget to address other support needs and low level LDD needs, very similar
to current arrangements
39.
This option would create a fund allocated solely to address the needs of
learners due to them being from low income households or other
identified disadvantaged circumstances. It would be allocated directly to
providers based on whichever allocation method is agreed (see
paragraphs 44 to 49 below).
40.
In addition, a second, separate budget would be allocated to address
other learning support needs (which could, as at present, use GCSE
points scores in English and maths as a proxy for identifying these
needs) and low level LDD needs.
41.
The funds would not be ring fenced, and therefore it would be for
providers to determine how these funds are best deployed to attract and
support disadvantaged learners.
16
Consultation on school funding reform, op. cit., p.31.
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Option 2 advantages
Option 2 disadvantages
Ensures providers have funding
relevant to the characteristics of
the cohort they recruit (that is,
for both economically
disadvantaged learners and
those with other learning needs
not related to economic
circumstances)
Similar to current arrangements
and does not simplify
Funding to meet low level LDD
needs is separately identified
and supports proposals in the
schools funding consultation
Funding targeted specifically at
economic disadvantage would
be reduced compared with
option 1
Least disruption for providers
with impact being relatively
minor – there are no significant
losers, and private providers
gain the most
Two funds to administer,(budget
to address needs of learners
from low income households
and a separate budget for other
learning needs and LDD)
Maintains current coverage of
learners (depending on
allocation method agreed)
Option 3: A fund to address general economic disadvantage only, with a
separate budget to address low level LDD needs. Funding to address other
learning support needs to be integrated into programme funding.
42.
This option would create a fund allocated solely to address the needs of
learners due to them being from low income households or other
identified circumstances, as in option 2 above. In addition, a separate
budget would be allocated to address low level LDD needs. There
would be no separately identified funds for addressing more general
educational disadvantage over and above those associated with low
level LDD. Instead, this element of the current ALS budget would be
incorporated into programme funding and it would be for providers to
use the enhanced programme funding for this purpose where
appropriate.
43.
Providers would be expected to use disadvantage funding to meet the
additional costs of attracting and supporting economically
disadvantaged learners, and to meet the needs of those with LDD from
a separate fund. The funds would not be ring fenced, so providers
would be free to determine how best to deploy funding to support
participation and achievement.
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Option 3 advantages
Option 3 disadvantages
Has a clear purpose, is
transparent and is fully targeted
on general economic
disadvantage
Two funds to administer (budget
to address needs of learners
from low income households
and separate budget for lowlevel LDD)
Ensures providers have funding
relevant to the characteristics of
the cohort they recruit (that is,
for both disadvantaged learners
and those with LDD needs)
Funding for disadvantage is
reduced compared to option 1,
as around 50% would be
needed for the increased
programme size and the
additional LDD budget
Funding to meet low level LDD
needs separately identified and
supports proposals in the
schools funding consultation
Funding for those with additional
support needs (except low level
LDD) that are not economically
deprived is not separately
identified; increasing the size of
the basic programme for all
learners would benefit all
learners rather than taking a
targeted approach
Increases the size of the basic
programme for all learners – if
the proportion of the current
ALS assumed to be for general
support rather than for
supporting those with LDD
needs were included in the
programme, there could be a
further increase of 5% in the
number of hours per learner
Creates significant shifts in
funding with traditional
Academies, general FE
colleges, and private providers
seeing the largest losses, and
converter Academies and sixth
form colleges seeing the highest
gains
Questions for consultation
Q2. Which of these three options would you support?
Options for calculating and allocating disadvantage funding
44.
All of the above options will carry significant funding over and above the
programme funding to address disadvantage. It is essential for the
methodology to allocate the funding to learners with the greatest need –
but it must also be transparent and simple. We have identified three
options for determining eligibility for the funding relating to the economic
disadvantage proportion of disadvantage funding. The impact on
providers for each of these options is illustrated in annex B.
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Option 1: Mirror pre-16 eligibility
45.
The pre-16 pupil premium is based on eligibility for free school meals,
for which the criteria is household income below £16,190: we could use
FSM as a measure post-16 as well. We could also make eligible the
additional categories of learners (children in care and service children)
who are eligible pre-16 – see paragraphs 50 to 56 for further information
on these additional categories.
46.
The schools funding consultation proposes two options for extending the
coverage of the pupil premium:17
 to include pupils eligible for FSM in one of the last three years
(known as FSM ever 3), or
 to include pupils eligible for FSM in one of the last six years (FSM
ever 6).
47.
17
When applied to 16-19 learners, FSM ever 6 gives the greatest
coverage and is used for the estimates and illustrations below. For
clarity, it is not proposed to re-assess learners’ eligibility post-16, but
rather to base the allocation on whether or not they were eligible in year
11.
Option 1 advantages
Option 1 disadvantages
Consistency with pre-16 means
that eligibility continues
unbroken post-16
Coverage is limited: 13% of the
cohort for FSM in year 11, or
26% of cohort when using FSM
ever 6; the coverage cannot be
scaled up simply
Simple enough for learners and
parents to understand
Requires complex data
matching between pre- and
post-16 data; the costs of
matching the data may outweigh
the benefits
Targets individual learners from
low income households
Uses data that is two years old
and does not reflect changes in
learner circumstances
Relatively straightforward when
a learner stays in the sixth form
in the same school
Claiming FSM pre-16 has issues
of stigma, therefore data is likely
to under-report the number of
eligible learners; there are also
differences in how FSMs are
operated at local authority level,
and therefore application may
not be nationally consistent
Consultation on school funding reform, op. cit., p.46.
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Option 1 advantages
Consultation
Option 1 disadvantages
Criteria would be different from
those used by the Skills Funding
Agency for post-19 funding,
requiring providers to
understand two systems
Option 2: Index of Multiple Deprivation
48.
The Index of Multiple Deprivation (IMD) is an indicator that shows the
relative deprivation of small geographical areas, known as lower super
output areas (LSOAs). It is published by the Social Disadvantage
Research Centre for the Department of Communities and Local
Government, and is used widely across government. As it is currently
used in the calculation of the disadvantage uplift, it is readily available.
Option 2 advantages
Option 2 disadvantages
Coverage can be scaled – on
the current definition around
25% of the cohort would qualify
Very small pockets of
disadvantaged learners in more
affluent areas are not picked up;
some learners who are not
disadvantaged may also be
picked up
Recognises the overall general
economic deprivation of the
catchment area (there are, on
average 200 LSOAs per local
authority)
Does not allocate funding on the
basis of where disadvantaged
learners actually live
No issues with learners
identifying themselves as
eligible, no stigma attached
Applied to local areas and not to
individual learners, therefore not
as transparent to learners or
parents as a FSM measure
The indicator recognises
changes in the cohort year on
year: learner data is only one
year old and the index is
relatively stable
Includes adult indicators of
deprivation as well as those
affecting children – for example
adult unemployment and benefit
claims
Widely respected indicator
across government
Not entirely consistent with pre16 although there is some
overlap
No requirement for additional
data and no additional costs, as
all calculations are done from
learner postcode
Data is robust and accurate
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Consultation
Option 2 disadvantages
Consistent with Skills Funding
Agency disadvantage funding
Minimal turbulence caused
Option 3: Income Deprivation Affecting Children Index (IDACI)
49.
IDACI is a sub-set of the IMD that focuses on the percentage of children
under 16 that live in families that are income deprived (defined as
household income below 60 per cent of the national average before
housing costs, and/or in receipt of certain benefits). It is also an areabased measure that would have the advantage of focusing the funds
more closely on children in areas of general economic disadvantage.
Option 3 advantages
Option 3 disadvantages
Coverage can be scaled – on
the current definition around
25% of the cohort would qualify
Not entirely consistent with pre16 although there is some
overlap
Directly recognises deprivation
as it affects children, and is
closely linked to deprivation
through using a small catchment
area
Not applied to individual
learners, therefore does not
associate funding with all
disadvantaged learners as FSM
does
No issues with learners
identifying themselves as
eligible, no stigma attached
Criteria would be different from
those used by the Skills Funding
Agency for post-19 funding – but
both would be postcode based,
and therefore would not require
providers to duplicate data
The indicator recognises
changes in the cohort year on
year – learner data is only one
year old and the index is
relatively stable
Widely respected indicator
across government
No requirement for additional
data and no additional costs, as
all calculations are done from
learner postcode
Data is robust and accurate
Minimal turbulence caused
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Questions for consultation
Q3. Which of the three options for establishing eligibility for
disadvantage funding would best reflect the Government’s
objectives?
Determining eligibility for additional funding for specific groups
50.
A key issue is which learners from specific groups should attract
additional funding. This is not a simple choice: the eligibility should
reflect the pupil premium pre-16, but the needs of young people are
different post-16. Young people 16-19 have highly complex lives, with
many of them living independently and being employed part time. We
are also mindful of the need for data to be accurate and recent, and to
avoid increasing the data burden on providers.
51.
In the current disadvantage funding methodology, young people’s home
postcodes determine uplifts on a sliding scale (between 8 and 32 per
cent) for learners who live in any of the 27 per cent most deprived areas
of England, as determined by the IMD.
52.
Providers other than school sixth forms and 16-19 Apprenticeship
providers are funded for seventeen additional categories relating to their
learners’ individual characteristics, including those who are in or have
recently left care, and these categories are listed in annex A. The
categories attract an uplift of 12 to 32 per cent.
53.
Feedback from the post-16 sector suggests that this is inherently unfair,
complex and expensive to evidence and administer, not least because
of the sensitive nature of the categories. The sector suggests that the
majority of these learners will be recognised by the revised eligibility
criteria for disadvantage funding. The system would be significantly
simpler and fairer across all provider types if these categories were no
longer recognised individually: therefore we propose not to explicitly
recognise these categories for funding allocation purposes.
54.
For the pre-16 pupil premium, recent leavers from care and service
children are automatically eligible. We need to decide whether to
replicate this for additional funding post-16. If we do, funding for these
groups would need to be calculated separately. Including these
learners would give consistency with the pre-16 pupil premium but
would mean prioritising these groups over others that we would no
longer recognise for additional funding. Care leavers are included in the
automatically eligible group for the 16-19 Bursary Fund in recognition of
the fact that they will tend to be living independently of parental or other
adult support. This is not the case for service children, although they
may receive support from the discretionary element of the Fund.
Therefore we believe there may be a case for including care leavers as
an individual category for additional funds post-16, but the case for
including service children is less strong.
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55.
Recognising these two groups separately for funding would mean
collecting additional data from schools, and continued data collection for
all other providers. If these categories were not eligible for additional
funding, we could stop collecting this data.
56.
However, removing eligibility for the additional disadvantage categories
may also result in some providers’ funding reducing, due to the
characteristics of the learners they recruit. The majority of providers
significantly affected would probably be local authorities and private
providers, with a few general FE colleges also affected. Funding
currently distributed for learners in the additional disadvantage
categories would be available to be redistributed into other
disadvantage funding, and therefore disadvantage funding could
increase for school sixth forms, who do not currently receive any
disadvantage funding for the additional categories. Analysis of 2009/10
data indicates that this increase would be up to 1 per cent of total
funding.
Questions for consultation
Q4a. Do you agree that the removal of the additional categories for
funding purposes is a welcome simplification?
Q4b. If not, what is your case for recognising some or all of these
categories for all provider types?
Q5. Do you believe that children in care and recent care leavers
should attract additional funding?
Q6. Do you believe that service children should attract additional
funding?
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3: Simplifying participation funding
57.
The Wolf review was unequivocal when it comes to funding on a per
learner basis.
Wolf recommendation 11
Funding for full time students age 16-19 should be on a
programme basis, with a given level of funding per student. (This
can and should be adjusted for differences in the content related
cost of courses, and for particular groups of high-need students).
The funding should follow the student.18
58.
The Government has accepted the recommendations made by the Wolf
review and determined that all 16-19 year-olds should have an
individually tailored programme that enables them to fulfil their
ambitions, whether that is on to employment or further study. Professor
Wolf argued that funding on a per learner basis would remove the
perverse incentive to ‘pile up’ qualifications rather than develop a
genuinely full time programme guided by a set of principles on content,
general structure, assessment and contact time.
59.
The use of measures such as guided learning hours (glh) and standard
learner numbers (SLN) in the funding formula creates an audit burden
for providers, and using them as a basis for funding can encourage
behaviour that is detrimental to a coherent programme of learning.
While measuring the size of a programme is important – we will need to
retain a way of doing this – we do not want to attach any additional
importance to the use of glh, which would increase the audit burden
attached to it.
60.
In moving towards funding on a per programme and per learner basis,
we propose that the funding received by providers for each learner be
expressed in financial terms, rather than glh or SLNs. This would mean
that there would be a clear price per learner, regardless of which
simplification option is chosen.19
61.
We need to make sure that such an approach is capable of responding
to other key recommendations made in the Wolf review, and accepted
by the Government. In particular, the review stresses that achieving
English and maths GCSE (at grades A*-C) is fundamental to young
people’s employment and education prospects. Yet less than 50 per
cent of learners have both at the end of their compulsory education, and
18
Review of Vocational Education, op. cit., p.8.
Apprenticeships are funded using the all-age Apprenticeships funding methodology, and
the Skills Funding Agency are already working on simplifying this. Funding for
Apprenticeships is presented as a rate for the framework, and therefore it is clear what is paid
for each framework. Therefore Apprenticeship funding will not be changed in line with this
section.
19
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at 18 the figure is still below 50 per cent. Only 4 per cent of the cohort
make this key achievement during their 16-19 education. Worse, the
funding and accountability systems established by government create
perverse incentives to steer young people into inferior alternative
qualifications.
Wolf recommendation 9
Students who are under 19 and do not have GCSE A*-C in English
and/or maths should be required, as part of their programme, to
pursue a course which either leads directly to these qualifications,
or which provides significant progress towards future GCSE entry
and success.20
62.
Therefore the funding per learner approach must also:
 deliver resources for English and maths attainment for young
people who have not achieved GCSE grade C in these subjects
during their compulsory education,
 avoid young people being put on non-challenging vocational
courses that offer little by way of progression, and
 include weightings to recognise the content-related costs of
courses.
Options for funding per learner
63.
We have considered a number of options for how funding per learner
could work. We have ruled out funding all learners at the same funding
rate, and believe that full and part time learners should be treated
separately. We also considered funding programmes for learners up to
level 2, and then for level 3 programmes separately or funding learners
based on typical study programmes. However, we do not believe these
approaches would be consistent with the reforms the Government is
pursuing following the Wolf review to ensure that all young people have
coherent and substantive study programmes.
64.
Your views are therefore sought on the following options.
 Option 1: Fund full time and part time learners separately at an
average funding rate for each.
 Option 2: Fund a basic programme size, with uplifts for enhanced
and large programmes. Part time learners would be funded
separately.
 Option 3: funding to recognise three different programme sizes.
Part time learners would be funded separately.
20
Review of Vocational Education, op. cit., p.15.
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Current programmes for full time learners
65.
Currently, there is a wide variation in the average amount of funded
teaching time that full time learners receive, which is broadly dependent
on the type of programme they are doing. The maximum guided
learning hours (glh) we currently fund is capped at 703 hours per year,
which includes 30 hours for tutorials or other non-qualification based
activities.
66.
The table below shows the average size of programmes across
academic and vocational qualifications (excluding Apprenticeships).
The average varies from around 530 hours per year (around 16 hours
per week) for programmes of three A levels, or small vocational
programmes, to around 700 hours per year (over 20 hours per week) for
someone on a programme of more than five A levels, or the
International Baccalaureate.
67.
Larger programmes are not restricted to academic programmes of
learning – the size of vocational programmes also varies significantly,
with 10 per cent of learners doing programmes of 700 hours or more.
Table 1: Average guided learning hours (2009/10 academic year)21
68.
Type of programme
Numbers
of learners
Average funded
glh per learner
per year
International Baccalaureate
programmes
4,000
694
Programmes of 5+ A levels
90,000
701
Programmes of 4 A levels
205,000
630
Level 3 vocational programmes
355,000
624
Level 2 programmes
125,000
581
Level 1 programmes
71,000
580
Programmes of 3 A levels
176,000
534
A mechanism that funds on a per learner basis needs to reflect the cost
of large programmes and be affordable. The exact funding level would
depend in part on other questions in this consultation, for example the
decisions made regarding the source of funding for disadvantage (see
paragraphs 37 to 43.)
Options for funding full time learners
69.
In each of the following options, all full time learners would receive a
basic level of funding, and this would fund a substantial programme of
21
Average time has been calculated using programme size after the cap has been applied,
including the entitlement of 30 glh.
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learning that follows the general principles in terms of contact time and
structure set out in recommendation 6 of the Wolf review.
Wolf recommendation 6
16-19 year-old students pursuing full time courses of study should
not follow a programme which is entirely ‘occupational’, or based
solely on courses which directly reflect, and do not go beyond, the
content of National Occupational Standards. Their programmes
should also include at least one qualification of substantial size (in
terms of teaching time) which offers clear potential for progression
either in education or into skilled employment. Arrangements for
part-time students and work-based 16-18 year-olds will be different
but the design of learning programmes for such students should
also be considered.22
70.
Alongside this consultation, the DfE is developing the principles for the
structure of study programmes,23 in order to implement the Wolf
review’s recommendations. The proposals would require providers to
offer full time learners a coherent educational programme that offers
depth, breadth and good progression opportunities, as well as
appropriate amounts of contact time. The size of a full time study
programme could be around 600 glh per year, which would provide
sufficient time for three A levels or a good sized vocational qualification,
with additional hours including English and maths where necessary.
71.
The impact on provider funding of implementing any of the three options
set out below is shown in annex B, and assumes we would maintain
current distribution.
Option 1: Funding all full time learners at the same rate
72.
We are keen to ensure that the funding methodology is as
straightforward as possible and our ambition is for a single rate. Option
1 is simple in concept: all full time learners would be funded at the same
rate, regardless of the actual size of their programme. The level of
funding would be appropriate for a substantial programme of learning,
as recommended by the Wolf review, as well as covering tutorials and
non-qualification or enrichment activities. In order to recognise that
some provision is more costly to deliver than others, programme funding
would be uplifted by programme weightings.
73.
It would be for providers to:
 define the learning package that each learner would be offered
within the programme principles,
 determine the learner’s programme: we would not require providers
to deliver the same amount of teaching time for each learner, so
22
Review of Vocational Education, op. cit., p.121.
Study Programmes for 16-18 year-olds, Department for Education, October 2011.
education.gov.uk/consultations
23
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that there would be flexibility for providers to make an appropriate
offer, with some learners receiving more and others receiving less,
 ensure that all learners are on a substantive programme, meeting
the minimum full time definition according to the legislation for
raising the participation age, which is yet to be published.
74.
For example, a learner on an A level programme could study for four AS
levels in year 12 and three A2 qualifications in year 13. This would
allow them to access either an additional qualification, or roughly an
additional 120 hours of non-qualification activities and tutorials across
two years.
75.
For those on lower level qualifications, the programme should be
designed to also cover:
 English and maths study, when the learner needs it,
 tutorial provision, and
 non-qualification bearing activities (for example, experience of the
workplace), where appropriate.
76.
The size of programme that determines the level of funding for full time
learners would be dependent on which option for the disadvantage
element is taken forwards and other questions in this consultation. If the
third option for funding disadvantage (which would including current ALS
funding within every learner’s programme funding) were chosen, the
programme size would increase by about 5 per cent.
Option 1 advantages
Option 1 disadvantages
It would be fair to learners as all
learners would attract the same
level of funding; it would be
transparent how much funding
each full time learner would
attract
Very large programmes over the
average size are not fully funded
by this method
Providers would have the
flexibility to manage the size of
programmes above the
minimum full time level
Large programmes may become
unattractive to providers and be
discontinued
Removes the incentive for
providers to encourage an
increase in the number of
qualifications being taken by
individual learners to increase
funding and allows providers to
deliver some enrichment
activities incorporated into the
programme where appropriate
Providers may reduce their
programme size to the minimum
required, in order to manage
financial pressures; this risks a
reduction in teaching time
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Option 2: Uplift to recognise larger programmes
77.
There are alternatives to a single rate, which introduce further degrees
of complexity.
78.
Option 2 would be very similar to option 1, but would also recognise that
in some cases large programmes, both academic and vocational, are
necessary to meet the aspirations and needs of some young people and
therefore these would attract additional funding.
79.
There are two options for determining how the additional costs of
delivering larger programmes could be funded.
 There could be two rates available for a full time learner: a rate for
the majority of provision that reflects the historical average of
delivery (as in option 1), with a second rate for the smaller number
of learners on large programmes such as the International
Baccalaureate, five A levels, and large vocational programmes.
 There could be a weighting applied to the basic rate for larger
programmes, to recognise the additional costs they incur. This
would be similar to the accelerated and intensive provision
weighting used within the HE funding system.
80.
The differences between the two options are largely presentational; they
would not be different in terms of the level of funding. The first gives
two funding rates rather than one, and the second adds a weighting –
both options increase complexity. Both would reduce the overall
average programme size by a small amount, around 1.5 per cent.
81.
While this extra rate or weighting caters for the delivery of larger
programmes, it does pose risks in terms of general affordability or to the
unit of funding in order to live within the funding available. We would
need to manage the delivery of the larger programme actively, to avoid
an upwards trend in programme size. One way of managing delivery
would be to ensure that only providers delivering large programmes to
the majority of their learners would be funded for larger programmes,
and/or only those providers that maintain high quality delivery would be
funded for large programmes. We would welcome views on how this
could be managed.
Option 2 advantages
Option 2 disadvantages
Large programmes can be funded
as an exception
A two tier approach to 16-19
learning could be perceived
Providers that deliver large
programmes to the majority of
their learners would have further
flexibility to manage the size of
programmes above the minimum
full time level
Funding a large programme by
either methodology would
mean a slight reduction in the
overall average programme
size for all other programmes
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Option 2 advantages
Option 2 disadvantages
Helps to control the incentive for
providers to encourage an
increase in the number of
qualifications being taken by
individual learners to increase
funding and allows providers to
deliver some enrichment activities
incorporated into the programme
where appropriate
Active management needed to
avoid upward drift to larger
programmes
Option 3: Funding to recognise different programme sizes
82.
Building on the previous options, option 3 recognises current delivery
more closely.
83.
Analysis of current delivery demonstrates that the size of full time
programmes (above 450 glh) varies significantly according to provider
types, as illustrated in table 1 (page 22). Historically level 1 and level 2
programmes are smaller than level 3 programmes option 3 would
recognise this variation, and though it would introduce a degree of
complexity, it would reflect the trends in current delivery. Option 3
would also recognise more explicitly that there will be young people for
whom larger than standard programmes are appropriate, and other
young people for whom even larger programmes, such as the
International Baccalaureate diploma, are appropriate.
84.
Option 3 could include the following programme sizes:
 A basic full time programme – for example, level 1 and level 2
programmes and small A level programmes. Providers would have
the flexibility to design each programme to include English and
maths where appropriate.
 An enhanced full time programme to recognise delivery of
programmes that require more teaching time – for example four A
levels and level 3 vocational programmes.
 A large full time programme as described in option 2 – for example
programmes of five or six A levels, the International Baccalaureate,
and large vocational programmes.
85.
As with option 2, we would need to actively manage delivery of the
enhanced and larger programmes, to avoid an upward drift, which could
pose an equal threat to the budget or the unit of funding. We would like
views on how to manage this.
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Option 3 advantage
Option 3 disadvantage
More accurately reflects current
delivery
Less simple, and could result
in difficulty in determining
which programme a learner is
doing
Providers that deliver large
programmes to the majority of
their learners would have further
flexibility to manage the size of
programmes above the minimum
full time level
Active management needed to
avoid upward drift to larger
programmes
Funding for three programmes
further reduces the funding
level for the basic programme
Questions for consultation
Q7a. Do you agree that a single rate for all full time learners based
upon historical average delivery (option 1) is appropriate?
Q7b. If yes, would you support an additional programme weighting
for delivering the International Baccalaureate diploma?
Q7c. If no, do you believe that there should be recognition of larger
programmes?
Q8a. If you do believe that there should be recognition of larger
programmes, do you support option 2 or option 3?
Q8b. For the large programme(s), would you support a further rate
or weighting?
Q9. What would be the best way to avoid an upward drift to larger
programme sizes?
Part time programmes
86.
We do expect compulsory participation for 16 and 17 year-olds to
change the pattern of part time attendance. As the pattern begins to
settle down in the next three to five years, we would reassess the
impact of funding and simplify the funding structure further where
possible. In the meantime, we believe that part time learners are
enrolled on programmes they want, and are able, to do, and therefore
they should be funded accordingly.
87.
The range of part time programme sizes is similar to those for full time
programmes: the number of learners on programmes of 50 hours is
nearly equal to those on programmes of 400 to 450 hours.
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88.
To a certain extent this will be resolved when the participation age is
raised, as all 16 and 17 year-olds will need to do a full time programme,
or at least 280 hours of learning if in employment.
89.
However, the raised participation age does not affect 18 year-olds, and
18 year-olds currently make up 25 per cent of 16-19 learners doing part
time programmes. It is unlikely that the participation age or any other
policy changes planned (as a result of the Wolf review, for example) will
alter this pattern of part time participation for 18 year-olds.
90.
We have explored the advantages and disadvantages of funding part
time learners on:
 a single rate for part time programmes – to give sufficient funding
for the minimum programme that all 16 and 17 year-olds will have
to take (280 glh),
 a range of rates.
91.
We have found that using one or two rates for part time programmes
would move funding from larger programmes to smaller ones. We
propose having three part time rates, and to express these as a
proportion of the standard full time rate.
92.
Table 2 illustrates the proposed proportion for each of the part time
rates and the numbers of learners that would have fallen into each rate
in 2009/10.
Table 2: Part time funding rates
Funding rate as a percentage of
the basic full time rate
Number of learners
in 2009/10
Part time
rate 1
60%
90,537
Part time
rate 2
30%
66,737
Part time
rate 3
7.5%
70,202
93.
As the impact of the raised participation age on the pattern of part time
attendance becomes clear, we would be able to reassess the
appropriateness of the three rates, and possibly further simplify the
funding structure.
94.
The range of hours and final percentages will be set taking into account
the removal of the short programme modifier (see paragraphs 136 to
141).
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Questions for consultation
Q10. Do you agree with the proposal of applying a proportion of the
basic full time programme funding for part time learners?
Q11. Do you agree that it is appropriate to fund at three part time
levels?
Weightings for programme funding
95.
One of the principles recommended in the Wolf review is that funding
should be related to content.24 As an example of the variation needed
by subject area, the review gives the example of engineering being paid
at a higher rate than office work.25
96.
While the current funding formula’s use of weighting factors commands
general support from the sector,26 it could be argued that it has become
overly complicated. The main causes of complexity are that weightings
are set at qualification level, and that there are too many different
weightings in use.
97.
We want to simplify the system of weightings without losing the principle
that funding should reflect the cost of programmes that are more
expensive to provide. We therefore propose to apply weightings at
programme, rather than qualification, level. This will bring it into line
with the overall approach to funding and effect a significant
simplification.
98.
The system could be made even simpler if there were fewer weightings
in use. There are six weightings for general and vocational
qualifications, and a seventh for basic skills aims. The weightings range
from 1.12 to 1.92. There are also seven weightings used for
Apprenticeships. It is reasonable to ask whether seven weightings is
too great a number, and whether fair and appropriate funding
distribution could be achieved with fewer.
99.
The values assigned to the weightings would be determined through
further analysis and based on responses to the principles set out in this
consultation. It is not intended that changes in the weightings' values
are made in order to reduce unit costs.
100. BIS and the Skills Funding Agency are also proposing to reduce the
number of programme weightings and to apply them across all
provision, regardless of mode of delivery. We propose aligning
programme weightings across 16-19 provision where it makes sense to
do so.
24
Review of Vocational Education, op. cit., p.14.
Review of Vocational Education, op. cit., p.58.
26 Review of Programme Weights, ACL Consulting, 2009, p.2 and pp.18-21.
25
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Weighting academic programmes
101. Academic qualifications (such as A levels and GCSEs) are currently all
weighted at the two lowest values (1 and 1.12). If we consolidated the
two lowest weightings into one weighting, with the value of 1.0, and
used it for all academic programmes, we would be able to fund all
academic programmes at a slightly higher rate. This would also mean
that around 2,000 providers would not need to consider programme
weightings in their funding formula calculations at all.
102. Analysis of the use of the weightings for academic qualifications
confirms that only a minority of academic qualifications (both in terms of
the number of qualifications available and the number of qualifications
delivered) are weighted at 1.12. Therefore this proposal will not cause
significant volatility for the majority of providers (85 per cent would see a
change of under 3 per cent).
103. The academic qualifications weighted at 1.12 are in science,
engineering, design, and some arts subjects. This would mean that
providers offering academic programmes concentrated in these areas
could experience a decrease in funding.
Weightings for vocational programme funding
104. Vocational qualifications cover a large range of subjects, and therefore
will need to be weighted in order for funding to reflect the costs of
delivery. Weighting for a vocational programme would be determined
by the subject of the core qualification.
105. In a similar way that the two lowest weightings would be consolidated,
we are considering reducing the remaining five weightings to three.
Table 3: Potential vocational programme weightings
Current weighting
Future weighting
1.3
Low
1.4
1.6
Medium
1.72
1.92
Specialist
106. For Apprenticeships, we are working with the Skills Funding Agency to
ensure we reduce the number of programme weightings and to seek
alignment to the proposals on which we are consulting for the whole of
the 16-19 programmes. The proposals for these changes are set out in
the Skills Funding Agency's update to the sector on its proposals for
simplifying the funding system.27 We will consider the responses to this
27
A simplified further education and skills funding system and methodology: summary of
responses to consultation, Department for Business, Innovation and Skills, November 2010.
tinyurl.com/SFAfundingconsultation
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consultation on the best way to ensure we introduce the right changes
to the Apprenticeship programme and that they align to our proposals
for creating a simpler system for all 16-19 provision.
Part time learners
107. Part time programmes would be weighted in line with their full time
equivalents.
Questions for consultation
Q12. Do you agree that we should merge the lowest two
programme weightings into one?
Q13. Do you agree that we should reduce the number of
weightings for vocational programmes?
Q14. Would reducing the number of weightings for vocational
programmes be a significant simplification?
Q15. Do you think that the proposed weightings for programmes
would appropriately reflect the relative delivery costs?
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4: Success rates
108. The current funding formula contains an element known as the success
factor, which is derived from the success rate. The success rate
combines retention and achievement rates, to measure the number of
learners who start and achieve the qualification they started on. The
success factor is the midpoint between the success rate and 100 per
cent – this ensures that no provider has a success factor under 50 per
cent, as a success factor below this point could have an unduly large
effect on funding.
109. There is evidence that suggests that the success factor in its current
form has driven up performance in the sector. However, there are three
developments that suggest that the current approach has come to the
end of its useful life. The first is an issue of administration and
transparency: the success factor is not the same as the success rate,
and the process of converting one to the other is not perceived as
transparent. The second, identified by the Wolf review, shows that the
use of success rates as an integral part of the funding formula may act
as a perverse incentive, encouraging providers to place young people
on programmes that are too easy, in order to protect the provider’s
success rate. The third stems from other important developments in the
pursuit of accountability and quality, which have given alternative means
of driving up performance. There are no equivalents of success rates
pre-16 or in HE.
Qualification success rates (QSRs)
110. The wider application of success rates in the presentation of a school or
college’s performance as part of its accountability to its community
means that the data that underpins them are going to need collection for
the foreseeable future. As this applies whether or not the funding
formula continues to make use of any element of the success rate, the
decision on its future can be based solely on an assessment of its
advantages and disadvantages to the funding formula.
111. On that basis, there are three options we are considering.
Option 1: Continue to recognise success
112. We would continue to use a success factor as part of the funding
formula, and therefore successful providers would continue to receive
more funding because of their higher success rates.
113. The application of the QSR could be made simpler and more
transparent, for example by including it in the formula as a standalone
element, rather than as part of the provider factor.
114. If a success factor were retained, we would have to address the issue
raised by the Wolf review around the lack of challenge and stretch in
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programmes, due to providers and awarding bodies wishing to raise or
maintain success rates by making sure that more learners can achieve.
115. To encourage providers to offer more stretching programmes and
qualifications, the percentage of funding affected by the success factor
could be reduced from the current 50 per cent to, for example, 25 per
cent. This would reduce the risk to providers but retain a financial
incentive to improve.
Option 1 advantages
Option 1 disadvantages
Funding is linked to learner
outcomes
It makes the methodology more
complex
Providers who serve learners
well are rewarded
It does not reflect or reward
those providers that get high
grades in qualifications, as it
uses a pass only not grades
Funding is for a broader set of
objectives than simply volume
and participation
Including success in both the
application of a minimum
standard and the funding
methodology increases its
importance and drives some
providers to seek to maximise
success rates, disadvantaging
those that make progress with
the hardest to help (although
less than current system)
Risk to providers recruiting
those with poorer attainment is
reduced
It can lead to risk averse
behaviour, in that it encourages
institutions “to steer a high
proportion of learners into
courses they are likely to pass
easily”28
Option 2: Remove the success factor completely from the funding formula
116. This option is the reverse of option 1. It would be a major simplification
in funding, although not in data collection. However, it would also
remove any financial incentive for continuous improvement.
117. In the longer term, funding would be fairer, as all learners would be
allocated the same amount for their programme, regardless of the
provider’s performance. This would mean providers could take greater
risks when recruiting learners who might not otherwise participate in
education or training.
118. Removing the QSR from the funding formula would have a minimal
effect on 51 per cent of providers. However, for 6 per cent of providers
Wolf Review of Vocational Education – Government Response, Department for Education,
May 2011, p.60. tinyurl.com/wolfreviewresponse
28
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it would mean a major change to funding of more than 10 per cent. In
effect, funding would be moved from providers with the highest success
rates to those with the lowest. This could also be seen as giving poorly
performing providers some financial resource to enable them to
improve.
119. The impact of removing the QSR from the funding formula is illustrated
in annex B based on if the success factor was not applied in 2009/10.
Option 2 advantages
Option 2 disadvantages
All learners receive the same
funding regardless of success
rates
No financial incentive to
maintain or aim for high
achievement rates
Major simplification in funding
Moves funding from high
performing providers to those
with the lowest success rates
Less risky for providers to
engage young people who
might otherwise not participate
in education or training
Risks reducing success rates
Less risky when putting learners
on qualifications or programmes
that challenge them, but that
they might not achieve
Allocates resource to providers
with poor success rates,
enabling them to improve
Option 3: Remove the achievement element, but keep the retention element
120. The concerns set out in the Wolf review are specifically linked to funding
success – however, the QSR comprises both success and retention
rates. It is possible that the success rate element of the QSR could be
removed from the formula, leaving a retention measure.
121. Such a change would fund providers for learners who have had the full
opportunity to achieve an outcome, rather than for the outcome itself.
122. The absence of a retention measure could result in an upward pressure
on unit costs, as providers would be funded for a whole year’s delivery
even when the learner withdraws before the year’s end. This would not
represent good value for money. We must retain the integrity of the
lagged learner number methodology by ensuring that we do not just
fund starts, but fund sustained participation.
123. There are two ways in which a retention measure could be included in
the formula.
a.
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We could use a retention element calculated at programme
component level – for example, on the basis of the individual
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programme components that a learner completes (programme
components that are not completed are not funded at all).
b.
We could use a retention element calculated at learner level –
for example, learners who do not complete either their
programme or the funding year are paid at 50 per cent of the
funding.
124. The impact on funding, based on 2009/10 data if we only funded aims
that learners fully completed, or only funded learners who completed at
least one learning aim, is illustrated in annex B.
Option 3 advantages
Option 3 disadvantages
Funding is for a broader set of
objectives than simply volume
and participation
No financial incentive to
maintain or aim for high
achievement rates
No financial incentive for
providers to start learners who
subsequently drop out
If option 3 (paragraph 123 a)
were implemented, there would
be a need for assessment at
component level
Less risky (although not risk
free) for providers to engage
young people who might
otherwise not participate in
education or training
Complexity created by learners
whose learning crosses
academic years, or who transfer
between providers
Less risky for providers when
putting learners on qualifications
or programmes that challenge
them, but that they might not
achieve
If applied at learner level then
there is the risk that
qualifications may be dropped
before exams are taken
Questions for consultation
Q16. Which option would you support for reforming success within
the funding formula?
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5: Further simplification
Area costs
125. The YPLA applies an uplift to some providers’ funding, to account for
geographical factors that make delivery more costly (primarily higher
wage costs). The areas attracting the uplift are mainly in London and
south-east England.
126. Area cost uplifts are used by other education funding bodies. The
dedicated schools grant (DSG) pre-16 and the Higher Education Council
for England (HEFCE) both acknowledge area cost differences, but
calculate the value and the application of their uplifts in different ways.
The Skills Funding Agency also applies an area costs uplift.
Simplifying area costs
127. It is proposed that an area cost uplift will continue to apply to provision
in high cost areas. There are two options for applying an area cost uplift
In future we could:
 retain the current uplifts, which align with the Skills Funding Agency
uplifts, or
 align with the proposed methodology for pre-16 school funding.
128. The DfE is considering a change to its area costs methodology for pre16 funding, and has included two options in the school funding reform
consultation.29
 Option 1: retain the current general labour market (GLM) approach.
 Option 2: combine the GLM approach with the specific costs
approach (SCA). While the GLM approach considers all wages,
the SCA only uses teacher pay bands, which are grouped into:
inner London, outer London, London fringe, and the rest of the
country.30 The combined approach would calculate an uplift based
on 68 per cent of the uplift being determined by spend on teachers’
pay (SCA), and 32 per cent determined by spend on non-teaching
staff pay (GLM).
129. Applying either of the DfE’s proposed pre-16 options to 16-19 provision
would give a larger number of providers an uplift, and would apply
across more areas of England; they are also more finely differentiated.
However, it would reduce the maximum uplift available, compared to the
current uplift. The impact of changing to either of the pre-16
methodologies is illustrated in annex B.
29
Consultation on school funding reform, op. cit., p.20.
A Consultation on School Funding Reform, annex D.
tinyurl.com/schoolfundingconsultationdocs
30
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130. There are also features of the DfE combined methodology that may not
fit well with all principles and features of post-16 provision. The SCA
element is based on teacher salaries with nationally applicable pay
bands – there is no similar structure for teaching staff working in post-16
education. In addition, Academies are not required to use the national
pay bands and may set their own salaries for teaching staff.
131. We will also need to consider whether the area cost uplifts applied post16 should be changed if the pre-16 area cost methodology changed
again.
132. The Skills Funding Agency applies an uplift to its rates in recognition of
the higher living costs and salary levels in London and south east
England. Currently the same index of area cost factors applies across
all learner responsive and employer responsive (including
Apprenticeship) provision. When providers are delivering 16-19 and
adult provision, and Apprenticeships, it would seem reasonable to keep
all area costs aligned. The Skills Funding Agency has no plans to
change their existing approach: it intends to retain the area costs uplift
in the simplified funding formula, as well as the current index. Therefore
Apprenticeships will continue to use the Skills Funding Agency area cost
uplift.
Question for consultation
Q17. Would you support retaining the current area costs
methodology, or would you support a change to the same area
costs methodology as used for pre-16 funding?
Residential care standards
133. The YPLA, through the provider factor element of the funding formula,
currently provides additional funding to providers with residential
accommodation for 16-19 year-olds living away from home where the
college is considered in loco parentis.
134. The funding responds to the additional costs associated with complying
with the Care Standards regulations. As the factor only applies to a
small number of providers, we propose that the residential element of
funding is removed from the formula and is distributed directly to the
providers that qualify.
135. The Skills Funding Agency is currently undertaking an evaluation of the
grants available to adults, including all residential funds, with a view to
simplification and transparency.
Question for consultation
Q18. Do you support removing the calculation of residential care
standards funding from the formula and distributing it directly to the
providers that qualify?
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Short programme modifier
136. The YPLA currently uses a short programme modifier as part of the
provider factor, to uplift funding for the proportion of short programmes
delivered. Short programmes are more costly to deliver relative to
longer programmes, as the induction and registration costs are not
related to the size of the programme.
137. For the majority of providers, the short programme modifier does not
generate a large uplift, and some providers may consider that the
benefit to making allocations fairer and more representative of their
delivery is not offset by the additional complexity and cost in the funding
formula.
138. Furthermore, the raising of the participation age will force the number of
short programmes to decrease rapidly, as the majority of young people
will be either in employment or on full time programmes.
139. We therefore propose to remove the short programme modifier from the
formula. The impact of removing the short programme modifier from the
funding formula would not have a large impact on 97 per cent of
providers. However, there would be some providers where short
programmes make up a large proportion of delivery, and they would be
more significantly affected.
140. Where delivery of part time programmes is appropriate, we propose that
part time programme rates will be paid (see paragraphs 86 to 94).
These rates could take into account the additional costs that short
programmes incur.
141. The impact of removing the short programme modifier in 2009/10 is
illustrated in annex B.
Question for consultation
Q19. Do you agree that the YPLA should stop using a short
programme modifier?
Data and audit
142. The outcome of this funding consultation and the consultation around
the implementation of the Wolf review will impact on the data needed to
support an efficient 16-19 education system. Work will be necessary in
order to assess the impact of any final proposals so that the bodies that
govern the collection of 16-19 data can ensure a smooth transition to
whatever new system is implemented.
143. It is expected that the earliest timescale for any data collection changes
relating solely and directly to funding simplification for schools,
Academies and colleges would be for the 2013/14 academic year. This
will ensure there is sufficient time for institutions to make the necessary
amendments to their systems.
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144. Our proposal is to reduce the amount of data providers are required to
collect for the calculation of funding, and to make those changes as
soon as possible.
145. The audit methodology will follow the funding methodology and if the
former is simplified then other risk factors being equal, the audit process
should also be simpler.
146. The YPLA will issue revised audit guidance to auditors reflecting
consequent changes to the audit approach.
Question for consultation
Q20. Do you have any comments on the impact that the proposed
options for changes would have on data collection or audit?
Equality analysis
147. Before submitting proposals to ministers we will conduct an equality
impact assessment. This will be published on the YPLA website, and
there will be the opportunity to comment on it and identify any possible
adverse affects on learners.
148. An initial analysis of all changes taken together shows they will benefit
learners from low income and disadvantaged backgrounds. An analysis
of the learner cohort has been carried out to identify groups of learners
who might be affected, and is included in annex C.
149. We have modelled the impact of the funding formula at macro level and
individual providers. This analysis will be complemented by evidence
from the sector through responses to this consultation. The sector is
asked to help identify where they believe the changes will have a
negative impact on different groups.
Question for consultation
Q21. Do you believe these proposals will have an impact on any
specific groups?
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6: Implementation
The Spending Review
150. Both the Comprehensive Spending Review and the white paper The
Importance of Teaching31 made it clear that changes to funding were
required for reasons of fairness and efficiency. This includes
convergence of the funding for schools and colleges by 2015. To
achieve this, two significant actions have been implemented for the
2011/12 allocation.
 Ending disparity in funding for 16-19 year-olds by funding all
providers at one national rate.
 Protecting main programmes of learning undertaken by 16-19 yearolds by reducing funded guided learning hours for the Curriculum
2000 entitlement to 30 glh per annum.
151. Although the funding rates for schools and colleges have risen
significantly over the last decade, it is still the case that the
implementation of fair funding alongside other policy changes has
resulted in some volatility in funding, which is being carefully managed
through transitional protection.
The funding formula review
152. As outlined in section 1 paragraph 8.f, a principle of the new funding
system must be to avoid financially destabilising good quality provision.
153. The current proposal as outlined in table 4 (page 43) is for all changes
to be made in 2013/14 academic year.
154. We are aware that the impact on providers of the changes to the funding
formula, on top of the changes made in the Spending Review from
2011/12, will differ depending on the particular type of provider, the
characteristics of their learners, and the types of programmes they offer.
155. While we have been able to review the impact that individual changes
may have, based on 2009/10 delivery, it has not been possible to fully
model the cumulative effect of all options. Although the case for change
is strong, we are conscious that, the cumulative impact of the reforms
may result in undue turbulence and that the change must be carefully
managed.
156. There are a number of ways that any volatility in funding could be
handled.
31
The Importance of Teaching, op. cit., pp.14-15.
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Option 1: Transitional protection
157. Transitional protection could be used to moderate the impact of the
funding formula changes in order for providers to manage and plan for
the change. There are two ways of applying transitional protection.
a.
Implement all changes in 2013/14 with transitional protection for
a three year period. We would supply each provider with an
indication of what their individual position would be at the end of
the three year period, to ensure providers can manage any
reduction. We would apply a maximum limit to any reduction or
increase in funding per learner each year, with any balance
being removed over the next two years.
b.
Extend the period of transitional protection by applying a
maximum limit to the change in funding per learner each year.
158. In all options transitional protection must be affordable from within the
current 16-19 budget. Those providers seeing an increase in funding
per learner as a result of the funding formula changes would have these
increases limited, in order to cushion the impact on the providers who
will experience a decrease in funding per learner
159. Details of transitional protection arrangements will be discussed with
provider associations prior to being published alongside the other
aspects of the funding system, once the final approach is confirmed.
Option 2: Phased implementation
160. An alternative way of minimising turbulence would be to phase
implementation. Instead of implementing all changes in 2013/14, we
would prioritise those that fulfil the key Government priorities of funding
at learner level, and transparent funding for disadvantage.
 In the first year we would implement changes to participation
funding, and to disadvantage funding.
 In subsequent years we would implement any other revisions, such
as for success rates and area cost.
161. Under this approach a degree of transitional protection would also be
applied to providers for whom a negative change to funding per learner
would have the greatest impact.
162. We are seeking your views on which of the above options would best
limit turbulence and enable providers to plan and manage change.
163. Following approval of the final methodology and timing for
implementation, it is our intention to calculate a ’shadow’ allocation for
each provider during 2012/13, which will illustrate the potential
allocations under the new system for the academic year 2012/13 based
on data that has been used to calculate the 2012/13 allocation. The
shadow allocation will be issued in summer 2012.
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Questions for consultation
Q22. Should transitional protection be applied across a fixed period
of three years or extended across a longer period?
Q23. Do you think that there should be phased implementation of
the proposed changes?
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7: Next steps
164. The table below outlines the overall timetable of the proposed changes.
Table 4: Timetable for implementing changes
October 2011 to
January 2012
Consultation with the sector, closing on 4
January.
Autumn 2011
YPLA staff attend stakeholder organisations’
events
Spring 2012
Decision on and announcement of the changes
to be made
2012/13
Development year – YPLA working with
stakeholder organisations. Further equality
analysis to be carried out on chosen options
2013/14
Raising of the participation age to 17
2013/14
Implementation of new funding arrangements
for 16-19 providers
2015/16
Raising of the participation age to 18
165. During the period of the consultation, the YPLA will join events
organised by stakeholder organisations and groups to provide further
information and clarification, and to receive feedback. Any organisation
wishing to invite the YPLA to such events should use the YPLA’s
consultation email address, given below.
166. Information and requests for clarification should be made through the
dedicated email address: yplaformulaconsultation@ypla.gov.uk.
167. Responses to the consultation can either be made:
 online: education.gov.uk/consultations,
 by email: 16-19Funding.CONSULTATION@education.gsi.gov.uk ,
 or by post:
Consultation Unit
Area 1C
Castle View House
Runcorn
Cheshire WA7 2GJ
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Annex A: Current funding formula
The current post-16 funding formula
1.
The current post-16 funding formula is as follows:
Funding
=
(SLN
National
funding
rate per
SLN
x
x
Provider
factor)
+
Additional
learning
support (ALS)
 Standard learner number (SLN): the measure of the volume of
learning activity delivered. One SLN is equal to 450 guided
learning hours, which is the current definition of a full time learner.
 The national funding rate per SLN is the amount (in pounds) paid
for each SLN.
 Provider factor: a factor that accounts for the relative cost of
provision. It is calculated annually for all providers, and is largely
based on recent historical data.
2.
The provider factor is calculated from the following elements.
Programme
weighting
x
Area
cost
uplift
x
Success
factor
x
Short
programme
modifier
x
Care
standards
uplift
x
Disadvantage
uplift
 Programme weightings: uplifts that support higher cost provision
such as agriculture/ horticulture, construction, and engineering.
 Area cost: uplifts that reflect the higher costs of delivering provision
in different parts of the country, particularly in London and the
southeast.
 Success factor: a factor than represents retention and achievement
rates. An average success rate is calculated for each provider,
which takes into account the size of programmes that have been
studied. The success factor is the mid-point between the success
rate and 100 per cent. The calculation recognises that there is a
basic cost of providing teaching and support to those learners that
do not achieve their qualification.
 Short programme modifier: a factor that provides an uplift to
address the additional cost of recruiting learners onto short
programmes.
 Care standards/residential uplift: allows for the extra costs in
relation to residential accommodation for 16 and 17 year-olds in
order to comply with the Care Standards Acts and subsequent
legislation and regulation.
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 Disadvantage uplift: calculated using the Index of Multiple
Deprivation (2007) to allocate funding to providers for learners
living in the 27 per cent most deprived lower super output areas
(LSOAs) of the country and some other circumstances. Additional
funding ranges from 8 to 32 per cent.
Programme weightings
3.
Programme weightings recognise that some programmes are more
costly to deliver than others. There are seven programme weighting
factors in the 16-19 learner-responsive model.
Table A1: Programme weighting factors
Weighting code
Weighting factor
A
1
B
1.12
C
1.3
D
1.6
E
1.72
F
1.4
G
1.92
Disadvantage uplift
4.
Two elements of the YPLA’s current demand-led funding formula
address disadvantage. The first is the disadvantage uplift, which
addresses general economic disadvantage. It is linked to disadvantage
based on where a learner lives or their individual circumstances. The
uplift is calculated on a sliding scale which increases the funding for
qualifications by between 8 and 32 per cent, depending on the level of
deprivation or the learner’s circumstances. For example, for a learner
on a programme of four A levels this would mean an uplift of between
£350 and £1,390. In 2011/12 the YPLA allocated £320m for
disadvantage uplift, and around 25% per cent of learners aged 16-19
received a disadvantage uplift.
5.
Disadvantage funding is also available for learners who fall into one of
the following categories.
 Basic skills learners – it is expected that very few 16-18 learners
will fall into this category, as they will not usually be doing a
substantial programme of study based around adult basic skills
qualifications. However, in the exceptional circumstances where
they are doing so they are eligible for disadvantage uplift under this
category.
 Those living in hostels and residential centres.
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 Those with mental health problems.
 Travellers.
 Those whose statutory education has been interrupted.
 Those in care or who have recently left care.
 Asylum seekers eligible for YPLA funding according to the Funding
Regulations guidance.
 Refugees.
 Ex-offenders.
 Offenders serving their sentence in the community.
 Full time carers.
 Those recovering from alcohol or drug dependency.
 Learners funded by the Single Regeneration Budget.
 Learners funded under the Offender Learning and Skills Service
(OLASS) arrangements.
 People living in supported accommodation provided by a registered
social landlord (RSL) or housing association (HA) registered with
the Housing Corporation, or provided by another non-profit-making
organisation in a building owned by an RSL or HA.
 People living in supported accommodation provided by a registered
charity.
 People living in supported accommodation registered with the local
authority or National Housing Federation.
6.
The second disadvantage element of the current funding formula
addresses specific educational disadvantage. Additional learning
support (ALS) funding is allocated based on prior attainment (as
measured by GCSE grades in English and maths) and historical spend
on additional support. As well as supplementing funding to support
achievement for those with poor literacy and/or numeracy, ALS is also
used to support those with low level learning difficulties and disabilities
(LDD), such as dyslexia, a degree of sensory impairment or moderate
disabilities.
7.
ALS is also allocated on a sliding scale with all full time learners
allocated some ALS funding. For example, in 2011/12 learners with the
lowest GCSE points score will attract £2,689 each, while those with the
highest score only attract £38.32
8.
In 2011/12 the YPLA allocated £355m for learners who needed less
than £5,500 of ALS. There is also ALS funding for those with higher
32
For FE colleges and all providers other than schools, 40% of ALS is allocated based on
historical spend.
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cost LDD needs – this funding is not part of this review, as it is covered
by the schools funding consultation.33
9.
33
For 2011/12 the Government has introduced a pre-16 pupil premium to
specifically address the issues of disadvantage up to age 16. For this,
the approach is based on eligibility for free school meals (FSM). Also
included are children in care and service children, for whom a reduced
premium is paid.
Consultation on school funding reform, op. cit., pp.30-33.
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Annex B: Impact analysis of proposals
1.
As well as considering changes to the elements of the funding formula,
we also need to consider what the impact the changes in the funding
system would have on providers: we have stated in the introduction that
one of the principles of a revised funding formula would be to avoid
destabilising good quality provision.
2.
Throughout this annex we have included analysis of the impact on
providers for each of the proposals in the main body of the document.
Funding disadvantage
3.
Proposals for revising funding for disadvantage are detailed in
paragraphs 37 to 43. The options are as follows.
 1: A single fund to recognise both deprivation and prior attainment.
 2: A fund to address economic disadvantage only with a separate
budget to address attainment in English and maths and low level
LDD needs.
 3: A fund to address general economic disadvantage only with a
separate budget to address low level LDD needs. Funding to
address poor attainment in English and maths to be integrated into
programme funding.
Chart B1: Impact on funding of options for implementing revised
disadvantage funding
100%
Option 1
90%
Option 2
Percentage of providers
80%
Option 3
70%
60%
50%
40%
30%
20%
10%
0%
Potential gains
(10% or more)
4.
Potential gains Minimal change Potential losses Potential losses
(3% to 10%)
(-3% to +3%)
(-3% to -10%) (-10% or more)
Option 1 creates a change in total provider funding of less than 3 per
cent for 76 per cent of all providers. The greatest impact would be on
traditional Academies with 27 per cent losing 3 per cent or more of total
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funding and on specialist colleges where 35 per cent lose more than 3
per cent. Private providers would see the greatest increases with 39 per
cent seeing an increase of 3 per cent or more, 27 per cent of sixth form
colleges would see an increase of over 3 per cent.
5.
Option 2 creates the least volatility with 94 per cent of providers seeing
less than 3 per cent change in total funding. The only significant impact
is that 24 per cent of private providers gain more than 3 per cent.
6.
Option 3 creates change in total provider funding of less than 3 per cent
for 80 per cent of all providers. Private providers would see the greatest
impact with 38 per cent losing more than 3 per cent. General FE
colleges would also see significant effects with 19 per cent losing more
than 3 per cent. The biggest gains are experienced by converter
Academies and sixth form colleges, with 29 per cent and 18 per cent
respectively experiencing gains of more than 3 per cent.
7.
Chart B2 shows the impact of the different options for determining
eligibility to attract disadvantage funding, as detailed in paragraphs 45 to
49.
Chart B2: Impact on funding of options for determining eligibility for
disadvantage funding
100%
Option 1: FSM
90%
Option 2: IMD
Percentage of providers
80%
Option 3: IDACI
70%
60%
50%
40%
30%
20%
10%
0%
Potential gains
(10% or more)
Potential gains Minimal change Potential losses Potential losses
(3% to 10%)
(-3% to +3%)
(-3% to -10%) (-10% or more)
8.
Option 1 (free school meals, FSM) creates the greatest volatility. 20 per
cent of all providers see a change in total funding of over 3 per cent.
The greatest losers are sixth form colleges with 9 per cent of colleges
losing more than 3 per cent, 8 per cent of general FE colleges and 5 per
cent of specialist colleges also lose more than 3 per cent. School sixth
forms and private providers see the biggest gains with 20 per cent and
23 per cent respectively seeing increases above 3 per cent.
9.
Option 2 (the Index of Multiple Deprivation, IMD) creates minimal
losses, only 6 per cent of all providers would see a change in total
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funding of more than 3 per cent and only private providers seeing
significant increases, with 24 per cent gaining more than 3 per cent.
10.
Option 3 (the Index of Deprivation Affecting Children Index, IDACI)
causes slightly more change than option 2 as the measure focuses
more closely on children. 9 per cent of providers would see changes in
total funding of more than 3 per cent and again only providers see
significant increases with 21 per cent gaining more than 3 per cent.
Chart B3: Impact on funding of removing additional categories from
disadvantage funding eligibility
100%
Percentage of FE providers
80%
60%
40%
20%
0%
Potential gains
(10% or more)
Potential gains
(3% to 10%)
Minimal change
(-3% to +3%)
Potential losses
(-3% to -10%)
Potential losses
(-10% or more)
11.
Removing the additional categories from eligibility for disadvantage
funding (as set out in paragraphs 50 to 56), has a minimal effect on the
majority of providers. 4 per cent could experience a decrease in funding
of between 3 and 10 per cent.
12.
As school sixth forms cannot receive funding for learners in the
additional categories under the current funding formula, making the
categories ineligible would free up a small amount of additional money
and might increase school sixth forms’ funding by up to 1 per cent - the
majority of school sixth forms could have an increase of up to 0.25 per
cent. Similarly, the majority (67 per cent) of other FE providers could
have an increase in funding, of up to 3 per cent.
Simplifying participation funding
13.
Proposals for how we could apply funding per learner are detailed in
paragraphs 64 to 85. The options are as follows.
 1: Fund all full time learners at the same rate.
 2a: Funding rates recognise larger programmes (such as the
International Baccalaureate, five A levels, and large vocational
programmes) through either a separate rate or through a weighting.
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 3: Funding to recognise different programme sizes.
14.
For some providers, changes in the funding formula will balance out, so
that their allocations continue at the same level: there would be loses
from reduced funding for large programmes, but increased funding for
smaller programmes. However, for the majority of providers this will not
be the case. This is because different types of providers tend to recruit
particular kinds of learners and those learners tend to do similar
courses.
15.
General FE colleges typically recruit across the whole range of learners.
School sixth forms and sixth form colleges focus mostly on A level
provision and will recruit a larger proportion of learners onto the very
large programmes referred to above. Independent providers and local
authority providers tend to recruit on to lower level courses, some of
which will be small programmes at the moment.
16.
The chart below shows the percentage change in allocations if option 1
(a single full time rate) were adopted. The table also includes the
impact of our part time proposals compared to 2011/12 total cash
allocations. The average change for different types of provider is not
very large (maximum 2 per cent increase and maximum 4 per cent
loss). However, we can see some significant shifts within provider
types, for example, over one-third of maintained sixth forms losing more
than 3 per cent of their funding and over 40 per cent of sixth form
colleges in the same position.
17.
The impact on providers of option 2 (recognising larger programmes) is
shown on the same basis, and is significantly less than a single full time
rate. The percentage of schools, Academies and sixth form colleges
losing 3 to 10 per cent of their funding is 22 per cent, while 12 per cent
of general FE colleges lose 3 to 10 per cent.
18.
The impact of implementing option 3 is broadly similar to the impact of
option 2. The overall number of providers experiencing significant
decrease (greater than 10%) decreases slightly – for specialist
providers, the percentage experiencing a significant decrease reduced
from 15% to 0%. However, when compared to option 2, the number of
providers experiencing minimal change (+/- 3%) and experiencing small
potential losses (-3% to 10%) increases slightly, and the number of
providers experiencing an increase in funding decreases.
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Chart B4: Impact on funding of options for simplifying participation
funding
60%
Option 1
Percentage of providers
50%
Option 2
Option 3
40%
30%
20%
10%
0%
Potential gains Potential gains
(10% or more)
(3% to 10%)
Minimal
change
(-3% to +3%)
Potential
Potential
losses
losses
(-3% to -10%) (-10% or more)
Weightings for programme funding
19.
The proposal to simplify programme weightings is detailed in
paragraphs 95 to 107.
Chart B5: Impact on funding of weighting simplification
90%
80%
Reduced number of weightings
Percentage of providers
70%
60%
50%
40%
30%
20%
10%
0%
Potential gains
(10% or more)
20.
Potential gains
(3% to 10%)
Minimal change Potential losses Potential losses
(-3% to +3%)
(-3% to -10%) (-10% or more)
For the majority of providers the impact is minimal change between 3
per cent gain or loss. A quarter of independent providers would lose
over 3 per cent, with 4 per cent losing more than 10 per cent. The
greatest impact would be on local authorities with 68 per cent with
potential losses in excess of 3 per cent, HE organisations where 27 per
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cent lose more than 3 per cent and general FE colleges where 19 per
cent lose more than 3 per cent.
Success rates
21.
The options for simplifying success rates are detailed in paragraphs 112
to 124. The options are as follows.
 1: Continue to recognise success.
 2: Remove the success factor completely from the funding formula.
 3a: Remove the achievement element, but keep the retention
element and calculate the retention element at programme
component level.
 3b: Remove the achievement element, but keep the retention
element and calculate the retention element at learner level.
Chart B6: Impact on funding of changes to success rate use
22.
The impact on providers of Option 1 is that for over 70 per cent of all
providers there is minimal change in funding, and no provider loses
80%
Percentage of providers
70%
60%
Option 1
Option 2
Option 3a
Option 3b
50%
40%
30%
20%
10%
0%
Potential gains
(10% or more)
Potential gains
(3% to 10%)
Minimal change Potential losses Potential losses
(-3% to +3%)
(-3% to -10%)
(-10% or more)
more than 10 per cent. Highest losses would be for converter
Academies with 36 per cent losing between 3 and 10 per cent, HE
organisations with 27 per cent losing 3 to 10 per cent and maintained
schools with 18 per cent losing 3 to 10 per cent.
23.
For Option 2 again no provider loses in excess of 10 per cent of funding.
Half of all providers would see minimal change, Academy converters are
the highest loses with 61 per cent losing between 3 and 10 per cent.
Around a third of maintained schools, HE organisations and sixth form
colleges would lose between 3 and 10 per cent.
24.
Option 3a creates minimal change in funding for around 50 per cent of
all providers. Independent providers would lose the most funding, with
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56 per cent losing more than 10 per cent of funding. Over 40 per cent of
specialist colleges and traditional Academies would lose between 3 and
10 per cent.
25.
The impact on providers of Option 3b is that for 73 per cent there is
minimal change. For around a third of both Academy converters and
HE organisations, potential loss is between 3 and 10 per cent.
Further simplification
Area costs
26.
Proposals for changes to area cost uplifts are detailed in paragraphs
127 to 131. The options are as follows:
 1. Retain the current uplifts.
 2. Align with one of the proposed methodologies for pre-16 school
funding: either the general labour market approach (GLM), or the
combined approach that uses both the GLM and specific costs
approach (SCA).
Chart B7: Impact on funding if using either of the DfE methods for
area cost uplifts
100%
DfE combined method
90%
DfE GLM method
Percentage of providers
80%
70%
60%
50%
40%
30%
20%
10%
0%
Potential gains
(10% or more)
Potential gains
(3% to 10%)
Minimal change Potential losses Potential losses
(-3% to +3%)
(-3% to -10%)
(-10% or more)
27.
There is minimal change for 88 per cent of providers with the DfE
combined method. The greatest impact would be for maintained
schools with 13 per cent losing between 3 and 10 per cent and
Academy converters with 10 per cent losing between 3 and 10 per cent.
28.
The alternate general labour market approach the greatest impact would
be on Academy converters with 10 per cent losing between 3 and 10
per cent.
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Short programme modifier
29.
The proposal to remove the short programme modifier is detailed in
paragraphs 136 to 140.
30. The impact on providers of removing the short programme modifier is
that for 97 per cent of providers there is minimal change. A third of
local authorities would lose between 3 and 10 per cent with 31 per
cent losing more than 10 per cent.
Chart B8: Impact on funding of removing the short programme modifier
100%
Remove short programme
modifier
90%
Percentage of providers
80%
70%
60%
50%
40%
30%
20%
10%
0%
Potential gains Potential gains Minimal change Potential losses Potential losses
(10% or more)
(3% to 10%)
(-3% to +3%)
(-3% to -10%) (-10% or more)
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Annex C: Equality analysis
1.
The Equality Act 2011 introduces a new public sector equality duty. As
part of this duty there is a requirement to complete an equality analysis
of the data held to support the implementation and the impact of any
policy, practice or procedure delivered by public sector organisations.
2.
The equality analysis needs to answer two questions as stated in the
YPLA Single Equality Scheme (2010-2013)34.
 Could/does the policy have a negative impact on one or more of
the groups of people covered by the protected characteristics of
equality? If so, how can this be changed or modified to minimise or
justify the impact?
 Could/does the policy have the potential to create a positive impact
on equality, by reducing and removing inequalities and barriers that
already exist? If so, how are these maximised?
3.
Some of the proposals are intended to make a positive impact on those
learners who are more disadvantaged.
4.
The initial stage of modelling for the new funding formula has focussed
on the macro level and individual providers. This has allowed the YPLA
to understand if the changes make sense and could work. Once
principles have been agreed the YPLA will analyse where there could
be unintended consequences. This analysis will focus on key protected
groups where we are able to do so. The key protected groups are:
 race,
 gender,
 transgender,
 sexual orientation,
 religion,
 age, and
 pregnancy/maternity.
5.
For the purpose of our analysis we can include: race, gender, and age.
We will also include analysis of those learners with learning difficulties
or disabilities. This analysis will be completed after the consultation,
once feedback has been analysed, to create a final proposed formula.
6.
Presented below is the preliminary analysis of learner responsive
funded provision including school sixth forms. This provides the starting
point from which possible impacts can be measured.
7.
The analysis completed by the YPLA will be supported by evidence from
the sector through responses to this consultation. The sector will
YPLA Single Equality Scheme, Young People’s Learning Agency, March 2011.
tinyurl.com/YPLAequalityscheme
34
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explain whether they believe the changes will have a negative impact on
different groups.
8.
Analysis of consultation responses that relate to equality issues, and
further equality analysis if necessary, will feed into the development and
implementation of the chosen options as part of the work undertaken
during 2012/13.
Learning profile: learner responsive
9.
All data provided is for the 869,435 learners in FE, in full year data for
2009/10 (L05).
Gender
10.
The split between males and females is 51.95 per cent male (451,632)
and 48.05 per cent females (417,803).
11.
In terms of funding, girls receive a higher proportion than their
population would suggest due to the higher SLN ratio of the learning
undertaken. Males receive 51.3 per cent of funding and females 48.7
per cent.
Learners with learning difficulties and disabilities (LLDD)
12.
18 per cent of learners (156,226) are classified as having LDD. The
SLN ratio for these learners is slightly lower than those without LDD so
they receive less funding (17.8 per cent) than their population would
suggest. Learners with LDD receive nearly 71 per cent of additional
learning support.
13.
Self-declaration of LDD varies between regions. In London only 11.9
per cent of learners are classified as LLDD (although there are 7.4 per
cent unknown) compared to 21.4 per cent in the south east.
14.
In all regions a higher proportion of male learners than female are
classified as having LDD. On a national level, 16 per cent of females
and 19.8 per cent of males are classified as having LDD. For females
this varies from 11.4 per cent in London to 19.2 per cent in the south
east, and for males it varies from 13.5 per cent in London to 23.6 per
cent in the south east.
15.
Male learners with LDD account for 42.6 per cent of all ALS funding
compared to 28.1 per cent for females.
Ethnicity
16.
78.5 per cent of learners are from the white British group. The next
biggest groups are Asian or Asian British, Pakistani (3.1 per cent), black
or black British African (2.8 per cent), any other white background (2.4
per cent) and black or black British Caribbean (1.9 per cent).
17.
While white British learners account for 78.5 per cent of learners, they
only account for 77.8 per cent of total funding. Some BME groups
receive a higher proportion of funding than would be expected given the
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proportion of the learner population – for example, black or black British
African (3.08 per cent funding and 2.75 per cent learners) and Asian or
Asian British Indian (1.97 per cent funding and 1.86 per cent learners).
18.
The gender split by ethnicity varies between ethnic groups. Among
white British and Irish learners the split is 48.5 per cent female
compared to 51.5 per cent male. This compares to the Asian group
where only 43.1 per cent of the learners are female compared to 56.9
per cent of males. Within this group those from other Asian
backgrounds have only 35.9 per cent of females.
Disadvantage
19.
30 per cent of learners (278,747) received disadvantage uplift because
they were from a deprived area. There is no significant difference
between males and females in terms of the proportion of learners from
deprived areas.
20.
Those from Asian, black or mixed backgrounds (54.4 per cent) are more
likely to be in receipt of the disadvantage uplift than those from a white
British background (26.8 per cent). Within the BME group some groups
are particularly likely to be in receipt of the uplift, such as Asian/Asian
British Bangladeshis (66.6 per cent), Asian/Asian British Pakistanis
(64.9 per cent) and black or black British Africans (63.1 per cent).
21.
Learners in receipt of the disadvantage uplift accounted for 37.6 per
cent of the total ALS spend reported.
Full time and part time
22.
82.8 per cent of females are on full time programmes, compared to 80
per cent of males.
23.
79.2 per cent of learners with LDD are on full time courses compared to
81.9 per cent of those who do not have LDD.
24.
82.1 per cent of those in deprived areas are in full time learning.
25.
There are large differences in the balance of full time and part time
provision between ethnic groups. The highest proportions on full time
courses are: Chinese (88.5 per cent), Asian/Asian British Indian (87.7
per cent), and black or black British African (87.5 per cent). The lowest
proportions on full time courses are: unknown/not provided (74.7 per
cent), mixed white/black Caribbean (78.4 per cent) and white Irish (78.6
per cent).
Table C1: Full time participation by learner ethnicity
Ethnicity
Full time
Any other
80.3%
Asian or Asian British – any other Asian
background
83.4%
Asian or Asian British – Bangladeshi
80.9%
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Ethnicity
Full time
Asian or Asian British – Indian
87.7%
Asian or Asian British – Pakistani
80.9%
Black or black British – African
87.5%
Black or black British – any other black
background
81.5%
Black or black British – Caribbean
82.5%
Chinese
88.5%
Mixed - any other mixed background
83.2%
Mixed - white and Asian
84.4%
Mixed - white and black African
83.2%
Mixed - white and black Caribbean
78.4%
Not known/not provided
74.7%
White - any other white background
81.9%
White – British
81.1%
White – Irish
78.6%
Level
26.
On average females study at a higher level. 60 per cent of females are
on level 3 provision compared to 47 per cent of males.
Table C2: Level of study
Notional level
Females
Males
Entry level
3%
4.4%
Level 1
11.6%
18.5%
Level 2
22.1%
25.2%
Level 3
59.9%
47.3%
Level 4
0.1%
0.1%
Level 5
0%
0%
Higher level
0%
0%
Other level
3.3%
4.6%
Learning profile: school sixth forms (SSF)
27.
All data provided is for the 402,347 learners in SSFs, in full year data
2009/10 (S05).
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Gender
28.
The split between males and females is 51.9 per cent female (208,894)
and 48.1 per cent male (193,453).
Special educational needs (SEN)
29.
Learners with any SEN represent 7.9 per cent of SSF learners.
30.
For males this figure is 9.5 per cent while for females it is 6.4 per cent.
31.
There is some regional variation, with London having the highest
proportion with SEN (11 per cent), followed by the south east (8.5 per
cent). The lowest is the north east (6.2 per cent), followed by the west
Midlands (6.6 per cent).
Ethnicity
32.
White British learners account for 75.3 per cent. The next biggest
groups are Asian or Asian British – Indian (3.9 per cent), any other white
background (3.4 per cent), and Asian or Asian British – Pakistani (3 per
cent).
33.
Not as many gender differences exist within ethnic groups as observed
in learner responsive provision. The two largest differences are for
Asian or Asian British – Pakistani where females represent 1.7 per cent
of learners and 3.2 per cent of all females compared to 1.3 per cent and
2.8 per cent for males and black or black British – African where
females represent 1.5 per cent of the overall learner population and 2.8
per cent of females, whereas for males the percentages are 1.2 per cent
and 2.5 per cent.
Free school meals (FSM)
34.
5.5 per cent of learners are in receipt of FSM. A slightly higher
proportion of females than males receive FSM: 5.9 per cent, compared
to 5.1 per cent.
35.
Those from Asian, black or mixed backgrounds are particularly likely to
be in receipt of FSM. Despite only representing 22.6 per cent of
learners, this group represents 48.9 per cent of those in receipt of FSM.
The white British group represents 75.3 per cent of learners but only 49
per cent of those on FSM. Within the BME group some are particularly
likely to be in receipt: Asian/Asian British Bangladeshis (29 per cent),
Asian/Asian British Pakistanis (18.9 per cent) and black or black British
African (18.6 per cent). The lowest proportion is white British (3.6 per
cent).
Page 60 of 61
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© YPLA 2011
Young People’s Learning Agency
Extracts from this publication may be
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or training purposes on condition that the
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not misrepresented.
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